Problem Statement: While the equity investment decision in HydroFruit, Inc. is expected to be extremely profitable, it has to be weighed against the ethical considerations that the tomato farm may employ an immigrant workforce, as well as the legal considerations that may result in fines and imprisonment for businesses that knowingly hire undocumented workers .
After 2005, employers are required to verify to the best of their ability, that the seasonal workers they hire are legally authorized to work within the U.S.
HydroFruit, Inc.’s voluntary participation in the Immigration Reform and Control Act (ICRA) reduced the company’s liability in case incidents of illegal employees surfaced .
HydroFruit’s CFO and Dillion are in agreement over the fact that it is impractical and harmful for the U.S. economy if illegal workers – who are a cheap source of labour – were no longer required to work in the agricultural, construction and manufacturing sectors .
Objective/Goal: The objective is to determine the feasibility from an ethical, legal and financial standpoint of whether or not MegaBank should risk an equity investment worth $65 million in a business that extensively depends on illegal workers .
Discussion/Alternative Solutions
Solution #1: MegaBank defers the equity investment decision until the midterm elections after which the government’s stance on illegal immigrant workers is expected to become clearer. Pros: The benefit will be that MegaBank will be protected from any discrimination lawsuits filed by angry undocumented workers who were refused employment, as well as insulation against any government-imposed fine or conviction for any member of its Board of Directors . Cons: Given the high-quality tomato produce of HydroFruit, Inc., some other financial institution might move in first and assume percentage ownership in MegaBank’s absence.
Solution #2: MegaBank proceeds with the investment as per schedule. Pros: The Company will immediately start reaping the profits of its investment. Cons: If legislation becomes more stringent regarding the background checks of potential or existing employees, MegaBank may find itself mired in lawsuits or would be forced to replace a major part of its workforce.
Recommended Solution: MegaBank should go through with the investment in HydroFruit, Inc. but the legal departments of both organizations should keep close tabs on any immigration-related legislative change that is being proposed. Since HydroFruit, Inc. currently is in compliance with all legal requirements pertaining to employing undocumented workers, as well as its voluntary participation in ICRA are all positive factors.
Works Cited
Boswell, Timothy. "HydroFruit, Inc.: Ripe for Harvest or Rotten Tomato?" Darden Business Publishing (2010): 17-26. Print.
